ARTICLES / General /
Reverse Mortgage FAQs /
Other Articles
Share This Article
Reverse Mortgage FAQs
By Hilary Gibson, Staff Writer
What Is the Service Fee
Set-Aside?
Under the FHA HECM program, you are
charged a monthly servicing fee that ranges from $30-$35
to manage your account once the loan closes. The SFSA is
an estimate of what the total servicing fees will be
over the life of the loan, by multiplying your life
expectancy (converted from years into months) multiplied
by either $30 or $35.
Although it's not considered a closing
cost, the SFSA can equal several thousand dollars, which
is deducted from your available loan proceeds. You do
not have access to that money, nor do you earn
interest.
Will I Lose My Government
Assistance If I Get a Reverse Mortgage?
A reverse mortgage does not affect
regular Social Security or Medicare benefits. However,
if you are on Medicaid, any reverse mortgage proceeds
that you receive must be used immediately. Funds that
you retain would count as an asset and could impact
Medicaid eligibility. For example, if you receive $4,000
in a lump sum for home repairs and spend it all the same
calendar month, everything is fine. Any residual funds
remaining in your bank account the following month would
count as an asset. If the total liquid resources
(including other bank funds and savings bonds) exceed
$2,000 for an individual or $3,000 for a couple, you
would be ineligible for Medicaid. To be safe, you should
contact the local Area Agency on Aging or a Medicaid
expert.
Why Do I Need to Get Counseling?
Counseling is one of the most important
consumer protections built into the program. It requires
an independent third-party to make sure you understand
the program, and review alternative options, before you
apply for a reverse mortgage.
Printable Version
|
|
|
